Question
review the information below, and then summarize this information in your own words. SUMMARY OF CONCEPTS STATEMENT NO. 3 COMMUNICATION METHODS IN GENERAL PURPOSE EXTERNAL
review the information below, and then summarize this information in your own words.
SUMMARY OF CONCEPTS STATEMENT NO. 3
COMMUNICATION METHODS IN GENERAL PURPOSE EXTERNAL FINANCIAL REPORTS THAT CONTAIN BASIC FINANCIAL STATEMENTS
(ISSUED 4/05)
Summary
This Concepts Statement is one of a series of Concepts Statements that the GASB has issued. These Concepts Statements are intended to provide a conceptual framework of interrelated objectives and fundamental concepts that can be used as a basis for establishing consistent financial reporting standards.
Concepts Statements are not used to prescribe the financial reporting standards that apply to a particular item or event. Instead, Concepts Statements identify the objectives and fundamental principles of financial reporting that can be applied to solve numerous financial accounting and reporting issues. They provide the GASB with the basic conceptual foundation for considering the merits of alternative approaches to financial reporting and help the GASB develop well-reasoned financial reporting standards. These Statements also assist preparers and users in better understanding the fundamental concepts underlying financial reporting standards.
This Concepts Statement clarifies the relationship of basic financial statements, notes to basic financial statements, and supporting information presented with basic financial statements within the framework of general purpose external financial reporting. It provides a conceptual basis for selecting communication methods to present items of information within general purpose external financial reports that contain basic financial statements. These communication methods include recognition in basic financial statements, disclosure in notes to basic financial statements, presentation as required supplementary information, and presentation as supplementary information.
Each of these communication methods is defined, and criteria are developed to help the GASB or, in the absence of authoritative guidance, a preparer of a financial report determine the appropriate method to use to communicate an item of information. Using a consistent approach in the selection of communication methods should benefit users in understanding the location and nature of information in financial reports.
This Concepts Statement also addresses the necessary elements for the effective communication of relevant and reliable messages within financial reports. This includes a clarification of the roles and responsibilities of the preparer, the user, and the GASB for the effective communication of information.
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